LAHORE: Policymakers are fully aware of the institutional decay in Pakistan but seem helpless to stop this rot as the resistance comes from bureaucracy, political elite and businessmen with vested interests.
The failure to turn economic stabilisation into economic gain is subject to establishment of a transparent and non-biased bureaucracy, a fair and impartial justice system capable of deciding cases fairly and quickly in a transparent manner. Sanity would not prevail if our main revenue watchdog remained embedded naked and visible corruption. Sustainable growth would follow if the above three pillars of our governance are truly reformed. Economic recovery is not blocked by fate -- but by institutions that refuse to change.
Bureaucracy suffers from political interference and frequent transfers, weak performance metrics. Outdated rules, seniority-based promotions, weak performance metrics and lack of domain expertise. Due to resistance at every level from bureaucrats to the rulers that lose their clout if transparency is imposed in true sense. Resistance also comes from business owners that are beneficiaries of non-transparent practices. Even the best policies fail if implementation is weak.
Lower judiciary that matters most is plagued by a massive case backlog. The delays raise the cost of doing business. Accountability is almost absent in all public institutions bureaucracy first, justice second, revenue third. Without fixing these pillars, no subsidy, package, or loan can deliver sustainable growth. Economic recovery is not blocked by fate -- but by institutions that refuse to change. Police and criminal justice system is in shambles. There is no public trust in the police system. Conviction rates are low due to weak investigation as vested interest interfere to stall or guide investigation in their interest with the connivance of the investigators.
Pakistan’s judicial backlog is not merely a legal issue; it is an economic one. Contract enforcement takes years. Commercial disputes remain unresolved indefinitely. Land and tax cases clog courts, locking capital that could otherwise be invested.
The FBR operates on narrow tax base, harassment-based enforcement relying mostly on indirect taxes. Pakistan cannot escape debt cycles without fixing revenue institutions. Political appointments with no performance accountability have further weakened the regulators. The public sector enterprises drain public finances more than any single development programme can recover.
Pakistan remains overly centralised resulting in weak municipal services. Mayors are not empowered and are without fiscal autonomy. Regulatory bodies like Nepra, Ogra, the SECP, etc faced the challenge of regulatory capture, inconsistent policies and slow decision-making. This has resulted in poor regulation raising the costs for industry and consumers alike.
Pakistan’s economic crisis is often blamed on external shocks -- IMF programmes, global inflation, geopolitical tensions, or energy prices. Yet this explanation conveniently ignores the most stubborn and expensive problem: institutional decay. The real drag on Pakistan’s economy is not a lack of ideas or even capital, but the failure of core state institutions to perform their basic economic functions. If reforms are not sequenced by economic impact, Pakistan will continue to treat symptoms while the disease worsens.
Businesses factor judicial delays into costs, pushing investment towards informality or abroad. Small firms suffer the most, lacking resources to survive prolonged litigation.A politicised and inefficient police system raises the cost of doing business. Weak investigations lead to low conviction rates, emboldening crime, smuggling, and extortion. Informal “security arrangements” become a hidden tax on businesses. When law enforcement lacks credibility, economic activity retreats into gated enclaves and cash-based networks.
Pakistan remains excessively centralised. Cities generate most economic activity but lack empowered mayors, fiscal autonomy, or planning authority. Poor urban services reduce productivity, raise living costs, and weaken human capital.
Pakistan does not suffer from a shortage of reform ideas; it suffers from reform avoidance. Unless institutional reforms are ranked and executed by economic impact, growth will remain fragile and unequal.
